Amid stagnant rents and a steady stream of new development, landlords are stepping up concessions as a way to fill apartments in Manhattan and Brooklyn.
Just over 25 percent of all Manhattan leases signed in November had some type of landlord concession, reaching a high of a least six years. By comparison, more than 13 percent of leases signed during the same period last year had concessions, according to the monthly rental report from Douglas Elliman.
In Brooklyn, 15 percent of leases signed last month had concessions, up from 7 percent year-over-year.
Median net-effective rents in both boroughs stayed flat, though they remain high. In Manhattan, taking concessions into account, median rent fell 1.6 percent year-over year to $3,264. Brooklyn’s median rent, including concessions, fell 2.1 percent year-over-year to $2,738. The luxury rental market in the borough, which is the top 10 percent of the market, fell 16 percent compared to November last year. In Manhattan the luxury rental market has remained steady. Brooklyn’s listing inventory rose 29 percent compared to this time last year to 2,606. In Manhattan it went up by 24 percent, to 7,283.
While concessions are increasingly widespread in Manhattan, the actual amount of the concessions is not rising.
“It’s relatively stable this year, it’s 1.2 months worth of rent … it’s been in that range all year,” said Jonathan Miller [TRDataCustom], CEO of appraisal firm Miller Samuel and author of the report. In Brooklyn, however, it’s a different story. While concessions for renters are less common, they are actually higher in size, at a median of 1.6 months.
“What’s driving these concessions is a tremendous amount of new development in the rental space,” said Miller, who added that just over 42 percent of all new development leases in Brooklyn last month included a concession.
In northwest Queens, the median rent in November was $2,555, a year-over-year fall of 6 percent. Miller said the Queens rental market has been “choppy” throughout 2016.
A separate monthly rental report from Citi Habitats found landlords’ heavy reliance on concessions is not lowering the vacancy rate.
“There remains a disconnect between what tenants can afford to pay, and what landlords believe tenants can afford to pay,” said Citi Habitats’ Gary Malin. “Many people are simply at their breaking point.”